Hong Kong stocks wipe out all Monday’s gains as effect of Beijing policy pledges wears off
- The Hang Seng Index ends down 3.1 per cent; The Shanghai Composite retreats 2.3 per cent; The Shenzhen Composite Index loses 2.2 per cent
Hong Kong’s benchmark stock index lost more than 800 points on Tuesday, erasing all of Monday’s gains, as a short-lived rally in the Chinese market fizzled out and a sharp drop in US futures indicated deeper losses to come on Wall Street.
The Hang Seng Index closed down 806.60 points, or 3.1 per cent, at 25,346.55.
On Monday, it had advanced 591.75 points, or 2.3 per cent, after mainland Chinese stocks posted their biggest jump in two and half years brought about by a flurry of support measures from Beijing to boost confidence in the economy and the market. The percentage gain was the biggest single-day increase for the gauge in a month.
“We knew the gains on Monday were temporary, but nobody expected the policy effect to fade out so soon,” said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi Financial Group.
“For now the market is not convinced the policies will actually help the economy, and investors are rushing to take profits and leave.”
Ryan Chan, an associate director for Eddid Securities and Futures, said China’s support measures have briefly boosted confidence, because they offer a short-term solution to the liquidity issue facing small-to-medium-sized businesses.